After years of investments in innovation, Gaussin is now on the cusp of scaling up its business. The company is now ideally positioned to cater to the demand for sustainable solutions in off-road transport. With the Amazon order of more than 300 vehicles due to be delivered in 2023, the company has a good runway for the near term. Moreover, with the company’s strategy to leverage its licensing model, to expand its geographic presence, and to execute operational improvements, we believe Gaussin will be able to accelerate revenue growth and expand EBITDA margins.
Our DCF valuation assumes a sales and EBITDA growth of 8% to correspond with the increasing number of deliveries in the future. For the NAV, we consider three segments, Off-road vehicle sales & Metalliance, Services, and Licensing. We value each segment on EV/sales multiples and apply different multiples to account for their contribution to profitability. We value the first segment at 1x sales as this division is yet to achieve breakeven. For the second segment, we apply a 4x multiple as we believe that the service business can be good profit driver due to attractive margins. Lastly, we value the Licensing business at 6x as most of the revenues translate into profits. Gaussin does not have listed comparable peers so, we pick listed peers from our coverage that align closest with the business model of the company. For this exercise, we pick Kion Group and Jungheinrich, which operate in the material handling sector. We do not assign any premium to Gaussin at the moment as we deem the success of its scaling crucial to doing so.
